Business

New Businesses And VAT Requirements – Is It Compulsory

Comments Off on New Businesses And VAT Requirements – Is It Compulsory 15 February 2011

Is VAT registration needed for a new company VAT registration comes with a number of pros and cons. These pointers should help you to decide whether VAT registration is for your new company. In the UK you can become registered at any time. A good accountant is recommended as they can talk over the advantages and disadvantages.

What is the projected turnover Probably the biggest factor in deciding whether your new company should go VAT registered is what your new company’s projected turnover is. And not just for the first year- think long term over three years. The current VAT threshold is 70,000 pounds. If at best you will only ever turn over 20,000 pounds, VAT registration, might not be worth considering. However, if you are anywhere near the threshold, if you don’t hit it in year one, you are more than likely to hit it in year two. In this case, it’s best for a new company to go VAT registered from the very beginning.

Will your client base expect you to be registered for VAT?

One important thing to consider when registering a new company is your client base. Consider a lot of businesses expect to be charged VAT. But they can claim it back, so has no cost to them. A lot can be said for a company by its turnover. Some companies will only do business with VAT registered companies. While on the back you have the price sensitive home customer, who can’t claim VAT. Becoming VAT registered can make you more expensive than those who are not VAT registered. With turnover you want to avoid having to change your pricing at a later date if you should become VAT registered. Fees for accountancy

Your new company is most likely going to be short of cash and so becoming VAT registered is probably a bill that is not needed. It is possible to do your own VAT returns online. The expert advice of accountants can be invaluable for any new company owner. All good accounts know what your able to claim back and can’t inside out. This is something that you might not know yourself.

What about if you get a VAT inspection?

A good accountant is invaluable should a VAT inspection arise. The proportion of VAT billing

What is the companys outgoings and what could be saved by being VAT registered?

That’s right, you can save money from being VAT registered! At the current time of writing, 17.5% on top of the price of the product or service is charged in VAT. You can not claim this back if your not VAT registered. But as a VAT registered company, you can claim this money back against anything you owe on your VAT return. Speak to accountants What I have written above are just a few points to think about when registering your new company. While my advice should be in mind, you should always seek advice from a good accountant while setting up a company.

For assistance with company formations, check out Optimum Formations, who specialise in UK company formations.

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